It's nearly four months since I placed a portion of my retirement funds into bitcoins.Specifically, I invested $25,000 into the Bitcoin Investment Trust (BIT) as part of my SEP contribution for the past year.Since my investment, bitcoins have declined steadily.And last weekend’s flash-crash in bitcoins sent the digital currency below $300, which seems to have steadied Monday at $335.00.My initial investment in BIT was at a per unit net asset level of $64.51.As of Monday, my new asset value for each of my units of the trust was $31.16.I’ve lost over half of my investment — ouch!During that period we've seen the Standard & Poor’s 500 Index SPX, +0.16% grow from 1,940 to over 1,965.However, this isn't about chasing returns (or at least, that's what I keep telling myself).Rather, the reason for my investment was about asset allocation and the incorporation of alternative investments into that allocation.The reality is that the bitcoin investment is less than 5% of my overall portfolio, so hopefully this assures me that I won't be eating dog food even if my investment in the Bitcoin Investment Trust goes to zero.

On the other hand, as with other alternative investments, the hope is that with high risk may come the reward of high return.By Jack Tatar Follow Jack's bitcoin investment in his retirement portfolio.• Why I’m adding bitcoins to my retirement portfolio • My risky retirement bet in bitcoins • How to get bitcoins into your retirement account • How I lost half of my retirement investment in bitcoins More from The RetireMentors » No one likes to lose half of their investment in whatever they invest in.For many of us, if we were losing that much, we'd have sold out a long time ago (hopefully).For those who invest in alternative investments such as hedge funds and partnerships, the reality is that you have less flexibility on when you can sell and are often tied into an investment for a period.One rule with my BIT investment is that I can't sell my investment for at least one year.After that time, I will actually be able to sell my shares in the OTCQX market, where theoretically, any investor could then buy these shares being offered for sale.

In the future, when bitcoins are traded in exchange-traded funds, I’ll have the ability to sell on price drops when prudent investing requires it.So, was my investment in bitcoins genius or just plain stupid?Well, if recent performance is any indication, I'd have to be considered at least "pretty stupid."But even with a drop of 50% and all the "love" I've received through comments from those who equate bitcoins with tulips, I don't feel entirely stupid.At least, not yet.The reason I feel this way is because even with the bad news and poor performance around bitcoins, there's actually some bright spots that lead me to "speculate" that my next three month performance checkup may bring me closer to being considered a "genius" (hope springs eternal).Here are some recent news items around bitcoins that give me hope that the end isn't near for them: You can donate bitcoins for good!The United Way has begun accepting bitcoin donations.Sir Richard Branson, the billionaire and business visionary believes that bitcoin is "working" and is accepting them as payments for his Virgin Galactic business which will provide commercial spaceship travel.

Maybe those in the financial planning industry have been reading my articles because the Financial Planning Association has just published a report in which they state that "individual investors can benefit from holding a small amount of bitcoins in a diversified portfolio."bitcoin only poker roomMIT students received $100 in bitcoins that they could spend at school this year, and other universities such as Duke and NYU are offering classes on bitcoin.bitcoin utahEBay announced their acceptance of bitcoins through their widely used PayPal solution.bitcoin pool calculatorApple Pay may not be the "bitcoin killer" that many think it is.bitcoin kaufen schnell

CNBC's Brian Kelly feels that, Apple Pay actually brings the need for a new payment process to the forefront and that could be good for bitcoins.(You can read my extended comments on Apple's new Pay solution here.)bitcoin casino illegalOf course, I may be wrong about bitcoins all together.bitcointalk gameOnly the future will tell.fast company ethereumBut I'm actually glad to be involved in following the future of bitcoins and for good or bad, I'm looking forward to the journey.buat bitcoinAfter all, progress occurs on a bumpy road.how to buy bitcoin krakenI'm also glad that I didn't invest that much money in bitcoins.What do you think I am?

DISCLOSURE: Jack Tatar owns shares in the Btcoin Investment Trust, which invests in bitcoins.More from MarketWatch: 5 takeaways from the Bank of England’s bitcoin report Bitcoin ATM opens in Manhattan in West Village 10 things bitcoin won’t tell youNow you can invest in Bitcoin through a tracker fund Brave investors with an appetite for the mysterious world of “crypto-currencies” will soon have the chance after a start-up announced plans to launch a "Bitcoin fund" in the coming weeks.DLT Financial, a new firm spun out of a technology business, Tramonex, is behind the fund, which will aim to track the likes of Bitcoin, the best-known of the new breed of revolutionary currencies.It will follow an index of 10 crypto-currencies including Ethereum and Ripple, which are designed for bank-to-bank transactions.Investors should be warned, however: few details have yet emerged about how the fund will operate.As with any unconventional assets, investors should be extremely wary and think carefully before placing money in such sectors.

Earlier this year it emerged that the Bank of England itself was developing its own proto-currency, known as RSCoin, prompting speculation that consumers could eventually bypass commercial banks entirely.Crypto-currencies came to notice following the launch of Bitcoin by a developer known as Satoshi Nakamoto in 2009.Online currencies are out of the control of the world’s central banks and allow anonymous transactions.They operate using a digital ledger of transactions known as a “blockchain”.A Bitcoin exchange owned by the Winklevoss twins – who famously won a £44m settlement in connection with Facebook – opened to British traders this summer.However, the currencies have proved to be highly volatile.In late 2013 the value of Bitcoin jumped to nearly $1,200 before plunging to less than $200.Patrick Connolly, of financial adviser Chase de Vere, said: “We look to invest in mainstream asset classes and are nervous in investing in anything that is completely out of the ordinary like this.